| Summary: | 碩士 === 國立東華大學 === 國際經濟研究所 === 92 ===
Majd and Pindyck (1987) is extended to analyze the application of investment program with stages of construction by numerical method. It is found that the less the total remaining expenditure required to complete the project in the last stage of construction, the less the critical cutoff value. Therefore, a firm will invest earlier and the probability that the investment program fails will decrease. Also, a decrease in the maximum rate of investment, an increase in volatility, and an increase in construction time all lead to an increase in the critical cutoff value because of the increase in the waiting value. Hence the free boundary will also increase, investment timing of each stage is postponed and the probability that the investment program fails will increase.
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